Head to Head Analysis: WPP (WPP) and Omnicom Group (NYSE:OMC)

WPP (NYSE: WPP) and Omnicom Group (NYSE:OMC) are both large-cap business services companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, risk, institutional ownership and analyst recommendations.

Dividends

WPP pays an annual dividend of $1.45 per share and has a dividend yield of 1.8%. Omnicom Group pays an annual dividend of $2.40 per share and has a dividend yield of 3.2%. WPP pays out 18.7% of its earnings in the form of a dividend. Omnicom Group pays out 47.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Omnicom Group has raised its dividend for 8 consecutive years. Omnicom Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.



Institutional and Insider Ownership

5.3% of WPP shares are held by institutional investors. 1.0% of WPP shares are held by insiders. Comparatively, 1.2% of Omnicom Group shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares WPP and Omnicom Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
WPP $19.67 billion 1.05 $2.34 billion $7.76 10.54
Omnicom Group $15.27 billion 1.12 $1.09 billion $5.10 14.78

WPP has higher revenue and earnings than Omnicom Group. WPP is trading at a lower price-to-earnings ratio than Omnicom Group, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and price targets for WPP and Omnicom Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
WPP 4 7 0 0 1.64
Omnicom Group 2 9 3 0 2.07

Omnicom Group has a consensus price target of $81.00, suggesting a potential upside of 7.47%. Given Omnicom Group’s stronger consensus rating and higher possible upside, analysts clearly believe Omnicom Group is more favorable than WPP.

Profitability

This table compares WPP and Omnicom Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
WPP N/A N/A N/A
Omnicom Group 7.25% 39.97% 5.24%

Volatility and Risk

WPP has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500. Comparatively, Omnicom Group has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500.

Summary

Omnicom Group beats WPP on 12 of the 17 factors compared between the two stocks.

About WPP

WPP plc provides various communications services worldwide. The company operates through four segments: Advertising and Media Investment Management; Data Investment Management; Public Relations & Public Affairs; and Branding & Identity, Healthcare and Specialist Communications. The Advertising and Media Investment Management segment provides advertising services; and media planning and buying, and specialist sponsorship, and branded entertainment services. The Data Investment Management segment offers brand, consumer, media, and marketplace insight services. The Public Relations & Public Affairs segment provides corporate, consumer, financial, and brand-building services. The Branding & Identity, Healthcare and Specialist Communications segment is involved in branding and identity; healthcare communications; and direct, digital, promotional, and relationship marketing activities. This segment also offers specialist communications services, such as custom media and multicultural marketing; event, sports, youth, and entertainment marketing; corporate and business-to-business; and media, technology, and production services. WPP plc was founded in 1985 and is based in London, the United Kingdom.

About Omnicom Group

Omnicom Group Inc., together with its subsidiaries, provides advertising, marketing, and corporate communications services. The company offers a range of services in the areas of advertising, customer relationship management, public relations, and healthcare. Its services comprises advertising, branding, content marketing, corporate social responsibility consulting, crisis communication, custom publishing, data analytics, database management, digital/direct marketing, digital transformation, financial/corporate business-to-business advertising, graphic arts/digital imaging, healthcare marketing and communications, and instore design services. The company's services also include direct, entertainment, experiential, field, interactive, mobile, multi-cultural, non-profit, shopper, promotional, retail, search engine, social media, and sports and event marketing services; and investor relations, marketing research, media planning and buying, organizational communications, package design, product placement, public affairs, public relations, and merchandising and point of sale services. It operates in North America, Latin America, Europe, the Middle East, Africa, Australia, China, India, Japan, Korea, New Zealand, Singapore, and other Asian countries. Omnicom Group Inc. was founded in 1944 and is based in New York, New York.

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